Solid order book to buoy ITMAX earnings potential

PETALING JAYA: ITMAX System Bhd is seen as a compelling investment opportunity, given its multi-year growth potential on the back of solid order and tender books.

Hong Leong Investment Bank (HLIB) Research, which has reiterated its “buy” call with an unchanged target price of RM2.90, said the home-grown smart city integrated system and solution provider’s recent contract win worth Rm77mil solidified its belief that this will elevate its earnings potential.

ITMAX’S 65%-owned subsidiary, Southmax Sdn Bhd, has accepted the letter of award from the Majlis Perbandaran Kulai (MPKU) to provide video surveillance and traffic light system services, which includes a smart command centre, a closed circuit camera system with artificial intelligence features and traffic light system on a monthly subscription in the MPKU area for a period of 15 years.

“Record high total unbilled order book of Rm958mil will be recognised progressively up to May 2039.

“Majlis Bandaraya Johor Baru (MBJB), Majlis Bandaraya Iskandar Puteri (MBIP), Majlis Bandaraya Pasir Gudang (MBPG) and MPKU are only four out of 16 councils in Johor and we expect all to come on board over time to realise the integrated smart city system.

“Akin to MBJB/MBIP/MBPG, this 15-year contract is one of the longest – and will grant ITMAX great opportunity to upsell more features, expand coverage and job scope to MPKU,” the research house said.

It added that solutions such as networked lighting and smart parking could be included in the future.

It expected the video surveillance and analytics services’ high margin to sustain under the deal, whereby the rental of each of the 300 cameras is projected to yield some RM1,200 per month.

In addition, the MPKU contract includes a smart traffic light system involving 33 controllers, leaving much room to grow as there are more junctions in Kulai.

“Contrary to its existing one-off billing for traffic management system, this will be charged based on monthly rental of around RM2,000 per month, enhancing its recurring income stream further over an even longer visibility,” HLIB Research added.